District of Columbia Employee Restrictive Covenants

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Description

Restrictive covenants in employment agreements can be very useful to companies on the leading edge of technology and business innovation. This document is a general checklist of factors employers should consider with respect to the use of such covenants.

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FAQ

The District's Ban on Non-Compete Agreements Amendment Act of 2020 limits the use of non-compete agreements. It allows employers to request non-compete agreements from highly compensated employees, as that term is defined in the Ban on Non-Compete Agreements Amendment Act of 2020, under certain conditions.

Prohibition on non-compete provisions for covered employees. "(a)(1) Beginning October 1, 2022, no employer may require or request that a covered employee sign an agreement or comply with a workplace policy that includes a non-compete provision.

Anti-moonlighting provisions that prohibit or restrict an employee from ?[a]ccepting money or a thing of value for performing work for a person other than the employer, during the employee's employment with the employer, because the employer reasonably believes the employee's acceptance of money or a thing of value ...

The District's noncompete law ensures that workers have the freedom to look for new jobs, work multiple jobs, and start their own businesses, and it ensures that businesses can freely compete with one another.

Moonlighting refers to an employee who works a second job on the side, usually after hours. California law generally protects the rights of workers to moonlight. Under California Labor Code section 96, employers are essentially prohibited from punishing employees who engage in moonlighting in their free time.

Moreover, some states have limits on moonlighting policies. For example, California doesn't permit an employer to require advance permission for outside work, noted Caroline Dickey, an attorney with Barnes & Thornburg in Los Angeles.

The long-awaited Washington, D.C. non-compete and anti-moonlighting law finally went into effect on Oct. 1, 2022. At the end of 2020, the Washington, D.C. Council passed the Ban on Non-Compete Agreements Amendment Act of 2020.

Often, they're included in an initial offer of employment; in Washington, non-compete clauses aren't valid after initial employment unless you're given ?independent consideration.? Typically, that means a raise or non-monetary compensation like stock options.

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District of Columbia Employee Restrictive Covenants